The UK has been rocked in the past fortnight by the seismic impact of the country’s citizens voting by a slim margin to leave the European Union and go it alone. The energy debate looks, by contrast, a much less complicated sideshow.
Families, work colleagues and acquaintances have been embroiled in civil war since the result. People were nowhere near as animated beforehand with complacent remainers convinced the riskiness involved in Brexit would sway the argument. Many on the leave side registered a protest vote fuelled (in part) by anger at the growing inequalities in British society, never truly believing, in many cases, that a big status quo pillar would be toppled in the process.
Anger and confusion now reigns with accusations of racism aimed at one side and elitism at the other. It’s a sorry, complicated mess and it will take some time to unravel before we get a clearer picture of how the UK will look, free of Brussels’ legislative influence.
So intricate is the puzzle of forecasting the country’s overall future that the energy sector, with its competing factions and partisan advocacy looks, by contrast, suddenly about as complicated as a six year old’s Venn diagram, even if there are some common traits.
The hard-core element of all technologies seems motivated to make exaggerated claims about the merits of its technology singularly out of a desire for self-preservation, while also maximising each technology’s profit potential amid an ever-evolving energy narrative.
The coal and gas people have long maintained that renewables supporters are delusional, with their offerings too expensive and unreliable. That has had to change somewhat of late as they continue to innovate the costs down.
Meanwhile the more animated among the renewables faction high-handedly point to (what they believe is) dinosaur thinking by the (what they might say is) the appropriately-named fossil group. That these businesses are facing a death spiral unless they repent and embrace 100 per cent renewables.
This perpetual clash of civilisations is, I suppose, only human. Industries are protecting their members’ interests.
Morally though, both sides, particularly the moderates among them, must know that we are going to need an adaptable menu of all these technologies over the coming decades to decarbonise, while keeping the lights on, and keeping the costs of this transition down.
The International Energy Agency are the closest we have to an independent voice of reason, but much of the time our media is full of triumphalism and propaganda from all sectors.
If a typical taxpayer attended the recent Financial Times Energy Transformation Strategies event they might get dizzy from the polarisation of opinion on display.
Beliefs of the Rival Factions
Here is a flavour of that debate, which offered a platform for both exponents of fossil fuels and renewables to state their respective cases. First the voices of the pro-fossil.
Philip Lambert, CEO of Lambert Energy and a former adviser to Statoil: “There is populist belief in renewables but not enough thought about the unbelievable risk of that position. There should be a full cost audit, a true carbon audit – We could be destroying a system without something sustainable to put in the aftermath.”
“You cannot replace baseload with intermittent and promise the people it’s going to work – the Germans were promised this would all be worthwhile because it would reduce carbon dramatically. Yet currently German carbon emissions per capita are 40 per cent above the UK, France and Italy- the audit hasn’t been done.”
Benjamin Sporton, Chief Executive of the World Coal Association: “India has something like 290 GW of new coal-fired power generation in the planning pipeline or under construction. At the same time there’s about 190 GW of renewable capacity in the planning pipeline – this isn’t an either /or, it’s a both. Coal does have an important role to play and we can’t wish it out of the energy mix- we need to think about how to treat coal as part of the energy mix but recognise we need to do something about how we can reduce emissions from coal to meet our climate target. If we don’t invest in low emissions coal technology we’re not going to meet our climate target – it’s as simple as that.”
Laszlo Varro, Chief Economist, International Energy Agency (IEA): “There are 700 large modern coal plants all across Asia that still have decades to go, there are around 400 billion tonnes of coal reserves under China, another 100 billion tonnes under India – the political reality is any government will regard those domestic energy resources as a strategic asset and it’s extremely difficult to see them voluntarily agree not to use their domestic coal resources. So we think that CCS retrofitting o the Asian coal fleet is part of the solution.”
“Urbanisation is growing at the rate of a city the size of London each month. This is steel, cement, glass and plastics and all the energy intensive commodities from industrial energy use – there is no technological possibility of manufacturing cement with solar power –it has to be done in the old school way.”
Christof Rühl, Global Head of Research, Abu Dhabi Investment Authority (ADIA)– “It is important to get the advocacy out of the debate and get the numbers clear because otherwise we will really fail to address this. If you look at the numbers, renewables amount to about 3 per cent of the global energy mix. Even if conditions allow them grow to 8- 10 per cent much faster than the growth we have seen, they will not dominate the system 20 years from today short of a major technology breakthrough falling from the sky.”
Then there is the other side of the coin.
Paul Gilding, Independent Writer (Author,’The Great Disruption’) and adviser on sustainability: “My conclusion from decades working inside boardrooms and thinking about this in my role in the university of Cambridge and studying economic history and change is that there is very little chance that almost any of these companies will transition not because they can’t or don’t want to but because culturally they are incapable of acting quickly enough. There is an enormous amount of delusion inside the industry as to what is happening. There has been for a very long time and delusion is valued very poorly by the market. Delusion is an invitation for the fast to eat the slow. That lack of understanding of how the world operates is the fundamental threat to the industry.”
“Energy is the thing that underpins economic growth and will address poverty and the market and technology has come to a point where it says we the market have got a better way of producing energy so you guys are no longer the fundamental underpinning of the economy. You are in a process of dramatic transformational change that you can’t see in front of you. To misquote Douglas Adams in Hitchhikers Guide to the Galaxy – ‘So long and thanks for all the energy.’”
Francesco Starace, Chief Executive Officer, Enel: “The oil price is no longer bad news for renewables. The mythical correlation between oil price and renewables no longer holds true.”
“I was once the head of sales of our company’s gas turbine division. Technicians didn’t believe in gas then and I see the same thing with (attitudes to) renewables today.”
“The costs of renewables are going down, they are adaptable, and improving in terms of volume and productivity, they are simple in installation- scalable, in terms of complexity totally different to nuclear, and a great job creator that doesn’t impact on the environment to the same magnitude as fossil plants.
“Because they are fast to build they suit governments and due to delays in predictions these are quick fixes for energy planners worldwide.”
Sherife AbdelMessih, Chief Executive Officer, Future Energy Corporation: “There is a tone of fear at this event. Those who criticise renewables used to say they are extremely expensive. That’s not true anymore- and we see some of the lowest electricity prices ever recorded, with a solar record of 6 cents per kilowatt per hour now.”
“I couldn’t believe the earlier panel discussing how renewables are subsidised – the fossil fuel industry is the heaviest subsidised industry in the world.”
“Renewables are no longer noise in the background – renewables are connecting more capacity to the grid than any other power source.”
“It was pointed out that renewables account for 3 per cent (of the global energy mix) today and yet it is giving you a run for your money. What is it going to do when it goes to 10 to 15 per cent?”
“Intermittency won’t be forever. Absolutely not. The cost of energy storage has fallen 80 per cent and that industry is in its infancy. When you merge solar and wind generation with energy storage so as renewables are no longer intermittent and it reaches the same cost as gas and coal, when that happens its game over.”
Uniting Technologies for the Common Good
A member of the public wandering in off the street might be confused at the force of righteous thinking from both sides. In their defence renewables might say they would never have made the strides they have if they were to be broken by the conventional’s often bullying narrative. Conventional power could say, without their steadfast defence of the old sectors, society might be threatened by overzealous green forces overplaying their worth.
The taxpayer is not in a position to keep tabs on all of the great debates that shape our world. He or she puts their trust in politicians and heads of industry and hopes that somehow the public interest is best served, economically and environmentally.
Polarised debate may serve a great purpose on one level but a best possible consensus needs then to take precedence, and rise above biased rhetoric.
The typical taxpayer might then be reassured by the words of Scott Foster, Director Sustainable Development Division, United Nations Economic Commission for Europe, who urged governments to start putting in policies based on rational economics
“There is a great part of the world that is worried about climate change, but it’s not the number one issue they are facing. They are worried about a roof over their heads and food on plates so in terms of Maslow’s hierarchy of needs, climate is on the list but not number one.”
“Simply to say ‘Fossil is evil, we have to move on to renewables’ is not enough. Renewables can’t deliver the quality of life that fossil can deliver. So it’s a mistake to look at it as renewables versus fossil, we’ve got to think about a sustainable energy system of the future and fossil has got an important role to play in that.”
“It’s very important to get alignments of interests – if we really do understand we are in the process of cooling our planet what’s the right approach to resolving that? The agents that are making the investments in the market, the politicians changing the rules of the game and setting up the investment framework conditions; if those interests get aligned properly with the desire we can see real societal change happening.
“We have to define what we mean by fair around the world as there are quality of life aspirations and if we are going to put a carbon price in and make fossils more expensive are those countries who are prepared to pay for investment in parts of the world with different priorities? In a nutshell it’s a mistake to think of it as an either/ or decision – every technology will have a role to play.”
While fossil continues to fight a rear-guard action in the face of ever more persuasive renewables progress, the clarity and fairness of the true picture, as expressed by Foster, needs to be reinforced for the public good.
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